Vega uses Tendermint as a consensus layer to form a blockchain. The rest of the information here informs on how that blockchain and its relevant components are comprised.
Read more: How Vega bridges to Ethereum
Delegated proof of stake
Vega runs on a delegated proof of stake blockchain.
Validator nodes run the Vega network, and they decide on the validity of the blocks containing the network's transactions and thus execute those transactions. The validators who run validator nodes are required to own a minimum amount of VEGA tokens that they delegate to themselves.
Read more: Validator nodes
Participants who hold a balance of VEGA, the governance asset, can use their tokens to nominate validator nodes. This is done by associating those tokens to a Vega key to use as stake, and then nominating one or more validators they trust to help secure the network. Nominating validators loans the consensus voting weight of the VEGA tokens to endorse a validator's trustworthiness.
Tokens, in addition to their use for nominating validators, also grant tokenholder voting rights on governance actions. If a token is delegated, its governance voting rights stay with the tokenholder and are not transferred to any validators that the tokenholder nominates.
Everyone participating in keeping the network secure, robust and reliable, including nominators, is rewarded for keeping the network running. Not meeting the requirements of running the network can lead to penalties, such as rewards being withheld.
Read more: Rewards
Vega is non-slashing -- there is no mechanism through which a tokenholder can lose a staked token through a validator being punished. Any measures to that end use different mechanisms that will affect a bad validator's (and potentially their delegators') revenue, but does not affect the delegated tokens themselves.
Read more: Penalties
Vega uses the VEGA ERC20 token for governance, which includes nominating validators to run nodes, and creating and voting on governance proposals.
A VEGA token (or fraction) can be either dissociated or associated with a Vega key:
- Dissociated: A tokenholder is free to do what they want with the token, but cannot nominate a validator with it
- Associated: The token is locked in the staking smart contract and can be used to nominate a validator. It must be dissociated to withdraw it
All tokens can be used for staking and voting on governance proposals. This includes tokens that are locked in the vesting contract. Tokens that are staked can be used to vote, and tokens used to vote can be staked.
Read more: Governance of Vega
A user's VEGA tokens must first be associated with a Vega key before they can be used for governance and staking.
Bridges used for staking
Both associating and dissociating VEGA tokens to a Vega key are initiated on Ethereum, rather than on the Vega protocol. This allows VEGA to be staked with a Vega public key without any action on the Vega network, and without putting the tokens under the control of the Vega network.
All governance voting and validator nominations happen exclusively on the Vega chain.
Ethereum gas fees are only incurred in the process of associating tokens to a Vega key and transferring rewards from a Vega key to an Ethereum address. Nominating validators and changing nominations does not incur gas fees.
The Vega protocol listens for stake events from staking bridges. Currently there are two bridges: one for staking unlocked, freely tradeable tokens, and one that connects to the vesting contract for locked, untradeable tokens.
Staking unlocked tokens uses the staking bridge contract. The staking bridge contains functions enabling users to deposit, remove, and transfer stake by notifying the staking bridge what tokens are associated to which Vega key.
When staking locked tokens, the Vega node interacts with the ERC20 vesting contract, which holds tokens that are locked per a vesting schedule, and provides the same utility as the staking bridge smart contract. This allows locked tokens to be used for staking and governance while not being freely tradeable.
Whether tokens are unlocked or locked, the bridge events let the Vega network know how many tokens a given party has associated and/or dissociated.
All events (including the above, plus stake per validator and others) are only registered after a certain number of block confirmations, as defined by the network parameter
See the Staking Bridge contracts on Vega's staking bridge GitHub repository.
There are several spam protections enabled to protect the Vega network.
- A participant who wants to submit a delegation (nomination) transaction, needs to have a balance of at least the minimum defined by the network parameter
spam.protection.delegation.min.tokensto be able to submit the transaction
- A participant cannot send more delegation transactions per day than the max set by the 👀spam.protection.max.delegations: 360 network parameter
Staking on Vega
This section is part of a series on the topic of Staking.
Vega networks use the ERC20 token VEGA for staking. Staking requires the combined action of associating VEGA tokens (or fractions of a token) to the Vega staking bridge contract; and using those token(s) to nominate one or more validators.
An epoch is a time period during which staking changes can be announced and then implemented. Changes that are announced in one epoch will only be executed in the following epoch (excepting 'un-nominate now'). The length of an epoch is 👀24h.
Using tokens to nominate validators keeps the decentralised network functioning.
Tokenholders can nominate validators to encourage a diverse set of reliable nodes running the network, and to give the community the opportunity to disincentivise and/or remove bad validators. Tokenholders who nominate validators are also eligible for rewards.
When a tokenholder chooses a validator (or validators) to nominate with their tokens, the amount is immediately subtracted from their available balance, and is used at the start of the next epoch to actively nominate those validator(s).
Read more: Rewards for staking
VEGA tokenholders can use token.vega.xyz to associate their tokens and nominate validators. A Vega Wallet and Ethereum wallet are both required. CoinList custodial users should confirm with CoinList how staking works for them.
Automatic nomination is triggered when an individual tokenholder has manually nominated 95%+ of their associated tokens. At that point, any newly associated tokens will automatically be nominated to the same validators, in the same proportion.
Exceptions to automatic nomination:
- If, ahead of the next epoch a participant uses their available tokens to nominate validators manually, that takes precedence over automatic nomination.
- For the epoch after un-nominating validators (see below), tokens are not auto-nominated, to provide time to change the delegation / remove tokens.
Participants can remove their nomination at the end of an epoch, or immediately. The un-nominated tokens will be restored back to the participant's associated token balance.
If nominated tokens are moved to a different Ethereum address, they are un-nominated immediately, (equivalent to 'un-nominate now') and rewards are forfeited for that epoch. In this case, or any case in which you dissociate tokens without first removing the nomination from a particular validator, the tokens are un-nominated from each validator you've nominated, in proportion to the nomination.
Un-nominate towards the end of the epoch
A participant can un-nominate towards the end of the current epoch, which means the stake is not used for the validator from the following epoch. The participant, and their nominated validator, is entitled to the rewards from that epoch (unlike when un-nominating now).
The action is announced in the next available block of the same epoch, but the nominator keeps their nomination active until the last block of that epoch. At that point, the tokens are returned. The nominator cannot move those tokens before the epoch ends.
A participant can choose to un-nominate at any time, and the action is executed immediately following the block it is announced in (within the same epoch).
The participant will not receive any rewards from the validator in that epoch. The tokens are marked as available to the participant.
Staking rewards & penalties
Validators and nominators both receive incentives for securing the network. The amount of those incentives, rewarded as VEGA, depends on factors including how much stake is nominated.
To be considered for staking rewards, a tokenholder must associate VEGA to a Vega key and nominate one or more validators.
Stake on token.vega.xyz to associate tokens and nominate validators. Staking rewards are paid into your Vega wallet after each epoch ends.
Staking rewards must be withdrawn to an Ethereum wallet, and then associated to a Vega wallet, before they can be staked.
In each epoch, rewards are distributed among validators in proportion to the number of tokens they represent (i.e., their total stake). The total stake includes a validator's own stake and the tokens nominated to that validator. Of this reward, a fixed amount is distributed among the tokenholders the validator represents.
The reward scheme uses a linear reward curve - the reward per staked token is independent of the behaviour of other tokenholders.
This holds for validators as well, with the exception that there is a maximum amount of stake an individual validator can take on. To avoid validators getting too big, the rewards a validator gets, and thus can distribute to its nominators, is capped. In other words, the reward per token is decreased if a validator exceeds a maximum size.
At the end of each epoch, reward payments are calculated per active validator, and then some of that reward is divided between their nominators.
Read more: Risks of over-staked validators
Staking rewards spec - more detail on how rewards are calculated and will be in future iterations.
Validator nodes that don't meet the requirements or prove to be bad actors will have rewards withheld, and a vaildator's nominators may also receive fewer (or no) rewards.
There is no token slashing, i.e., a tokenholder cannot lose their tokens through any actions of a validator.
The Vega network is operated by a number of independent validators, who each run a node.
There are three types of validator nodes: consensus validators, standby validators, and pending validators.
Consensus validators are responsible for keeping the network and transactions running. Standby validator nodes are ready to step in if a consensus validator node does not fulfil its requirements. Pending validator nodes are one level below standby, and should be equipped to move up and replace a standby validator node if a spot opens up.
Consensus validator nodes
Consensus validator nodes are responsible for agreeing on the order of transactions and creating new blocks so that all nodes can agree on the state of the network.
They receive rewards based on having enough (but not too much) self-stake, as well as how many tokenholders nominate them. The tokenholders who nominate them also receive a cut of the rewards.
If a consensus validator's stake or performance is subpar, their validator score will be lowered, and that validator's node will be chosen less frequently to propose a block, because Vega feeds the voting power of each validator node to the Tendermint consensus algorithm.
This can also affect the rewards they and their nominators receive.
If a consensus validator node stops validating, or performs poorly, then a standby validator can replace it.
How consensus validators are chosen
Consensus validators are chosen based on a range of variables, including the validator scores, and the number of available slots. If there are no empty slots, at most one validator can be changed per epoch.
If a standby validator has a better validator score (which includes performance score and stake) than an existing consensus validator, then a standby validator can be promoted to replace a consensus validator.
Standby (also called ersatz) validators do not contribute to the chain, but are set up to join the consensus validator set if there are free slots for consensus validators, such as if one drops off or more slots are made available. As they don’t participate in consensus, they don’t need to be registered with a multisig contract.
As with the consensus validators, standby validators need to have a certain amount of self-stake and nominated stake.
Standby validators, and the tokenholders who stake them, receive a share of rewards. The rewards for standby validators are calculated and penalised in the same way as consensus validators, except scaled down based on the stake they have. How much they are scaled is based on the network parameter 👀network.validators.ersatz.rewardFactor: 0.5.
The network is set to not allow any standby validators for alpha mainnet, and the number of validators will be increased via governance as early alpha mainnet progresses.
How standby validators are chosen
If there are free slots for one or more standby validators, and there are nodes that have submitted the transaction to join (and satisfy all joining conditions), they are added as standby validators in the next epoch.
If a node that submits the transaction to join has a higher score than the lowest scoring standby validator (scaled up by the incumbent factor), then it will become a standby validator and the lowest scoring standby validator is removed from the standby set.
Note: A node that has a ranking score of 0 (meaning they have no stake and a performance score of 0) for longer than 10 epochs is removed from Vega and will have to resubmit their request to become a validator.
Read more: Becoming a validator
Moving from standby to consensus validator
A standby validator that wants to be in line for promotion to become a consensus validator needs to do the following:
- Run a validator node
- Have enough self-stake: 👀3000 tokens
- Forward the relevant Ethereum events
Validator node performance
A validator node’s performance is calculated based on three factors:
- Ranking, whether it is a consensus or standby validator
- Voting power based on the performance, which defines the performance score
- Stake, which defines the validator score
Performance score: Consensus validators
For each block, the proposer is selected deterministically and the number of times each consensus validator is selected is roughly proportional to their voting power.
A validator’s performance is calculated as follows:
p be the number of times the validator proposed blocks in the previous epoch
b be the number of blocks in the previous epoch
v be the voting power of the validator in the previous epoch
t be the total voting power in the previous epoch
let expected =
v*b/t the number of blocks the validator is expected to propose.
validator_performance = max(0.05, min((p/expected, 1))
Performance score: Standby validators
The performance score for new standby validators is set to 0. The performance score of a standby validator is calculated based on them successfully submitting transactions.
Validator candidates that have submitted a transaction to become a consensus validator will need to send a hash of block number
b, separately signed by the three required keys and submitted, during each epoch and every set number of blocks (
numBlocks = the higher of (the lower of (50 and the epoch duration in seconds) and (epoch duration in seconds x 0.01)
The message with the signed block hash must be in blocks
b+numBlocks to count as successfully delivered.
The network will verify this to confirm that the validator owns the keys.
b is defined as:
- The first time, it is the block number in which the joining transaction was included
- Subsequent times, it is incremented by
The network will keep track of the last 10 times a standby validator was meant to submit the transactions, and the performance score is the number of times this has been verified, divided by 10.
The validator score is calculated for each epoch, based on how much stake a validator has as well as other factors including the total number of validators and the optimal stake. This is true for both consensus and standby validators.
If, at the end of an epoch, a validator does not have sufficient stake self-nominated or has overall too much stake, then their validator score will be lowered. This can impact the rewards a validator and its nominators receive.
Below are the two factors that can lower a validator's score, and why.
Not enough self-nominated stake
Self-nominated stake refers to the amount of VEGA a validator has staked to their own node. The minimum stake amount required is 👀3000 tokens. Not having enough self-nominated stake can have an impact on rewards.
- Network risk: A validator who has not committed enough stake to meet the minimum is a risk to the network because they may not be invested in keeping the network running
- Validator score: If a validator does not have 👀3000 tokens, the validator is given a lower score, which can affect their reward
- Reward impact: A validator with too little self-stake forfeits their share of the rewards for each epoch they are below the threshold. However tokenholders who nominated that validator will still receive rewards
Too much stake
An over-staked validator has more stake than is ideal for a healthy and functioning network. Staking to an over-staked node can affect your rewards.
- Network risk: The risk of an over-staked node is that it could have too much consensus voting power
- Validator score: A node that is over-staked is given a lower validator score - the more over-staked it is, the lower the score
- Reward impact: If a validator is too far from optimal stake, the validator and tokenholders who nominated that validator will not receive rewards for every epoch the node is heavily over-staked
As of version 0.47.5, the Vega network does not prevent tokenholders from nominating stake that would cause a node to be over-nominated. Tokenholders must actively manage their stake and keep track of the nodes they support.
Validator score calculations
The validator score takes into account a number of factors, including the total stake, optimal stake, minimum number of validators required, actual number of validators, and more. See below for how the validator score is calculated.
Factors that affect the validator score:
min_validators = value of the network parameter that defines the minimum viable number of validators to run Vega
num_validators = actual number of validators running nodes on Vega
comp_level = value of the network parameter that defines the competition level
total_stake = sum of all stake across all validators and their delegations
optimal_stake = total delegation divided by the greater of
min_validators, OR (
comp_level): Optimal stake is how much stake each validator is expected to have, at most
optimal_stake_multiplier = value defined by the network parameter, which indicates how many times the optimal stake a validator is penalised for, if they are further than the optimal stake
validator_stake_i = stake of the given validator whose score is being calculated
flat_penalty = the greater of 0, OR (
higher_penalty = the greater of 0, OR (
The validator score is calculated as follows:
validator_score = (
Assuming the available reward pool is 1000, and there are 3 validators:
- Validator 1 is heavily over-staked and they are given a validator score of 0
- Validator 2 is not over or under-staked and gets a validator score of 0.2
- Validator 3 is also well-staked and gets a validator score of 0.2
Those scores are then normalised (divided by the sum of them):
- Validator 1 gets a normalised score of 0
- Validator 2 gets a normalised score of 0.5
- Validator 3 gets a normalised score of 0.5
The normalised validator score number directly affects how much each validator (and its nominators) would recieve of the 1000 reward.
- Validator 1 (and its nominators) will receive 0 rewards. Validator 2 & 3 will split the 1000 equally.
Becoming a validator
The network is set to not allow any standby validators for alpha mainnet, and the number of validators will be increased via governance as early alpha mainnet progresses.
A node operator that wants to express interest in running a validator for Vega needs to do the following:
- Start a Vega validator node, including the associated infrastructure
- Submit a transaction using their keys, announcing they want to validate, and receive a response that the network has verified key ownership (see below)
- Self-stake to their validator Vega key at least 👀3000 tokens
- Wait for others to nominate them. It would be worth announcing to the community that you have started a node and are looking for stake)
Validators need to run a set of executables each with their own resource requirements to enable the network to function under varying loads.
For a validator running a node the following guidelines can be used when sizing up the hardware required.
|CPU||4 cores at >3Ghz||6 cores at >= 4Ghz|
|Storage||256GB SSD||1TB NVMe SSD|
The impact of using fewer cores than recommended is that the critical parts (data node and non-validators) will be starved of CPU resources, which will reduce the maximum throughput of the network.
The impact of having slower cores than recommended (or older cores that have a reduced IPC rate compared to modern Zen3 cores) is that the maximum throughput will be reduced due to the bottlenecks being single threaded.
How candidate validators are ranked
At the end of each epoch, the Vega network will calculate validator score. The consensus validators during that epoch will have their validator scores scaled by (1 + 👀1). This number combines self-stake and nominated stake with the performance score (which measures basic node performance).
Vega sorts all current consensus validators from the highest performance score to the lowest. All of those who submit a transaction expressing intent to be a validator are then sorted by their validator score, highest to lowest.
- If there are already empty consensus validator slots, then the non-consensus validators who have the top scores are moved in to be consensus validators, starting in the next epoch.
- If a potential validator has a higher score than the lowest incumbent consensus validator, then in the next epoch the higher-scoring validator becomes a consensus validator, and the lowest scoring incumbent becomes a standby validator.
- If two validators have the same performance score, then the network places higher the one who's been validator for longer, and if two validators who joined at the same time have the same score, the priority goes to the one who submitted the transaction to become validator first.
Vega networks will, at least initially, run for a limited time only.
There are several reasons for this decision, including:
- Limited network life makes it efficient to upgrade the protocol by starting again, as it avoids the need to deal with multiple versions of the code. Upgrades to a running chain need to respect and be able to recalculate the deterministic state for earlier blocks, so all versions of critical code must remain in the system.
- It allows for rapid iteration, as the ability to start new chains for new features is simpler.
- Once there is a network with trading, the thousands of transactions per second will generate a lot of data. Given that most instruments expire, this allows for new markets to be created on a new chain, allowing an old market/chain to come to an end rather than keeping the history and data forever.
The network's validators periodically store checkpoints of all important state parameters such as balances and governance proposals.
Checkpoints allow the chain to be restarted from a previously valid state in the event of consensus failure, or a critical issue being discovered.
Those checkpoints happen at defined intervals, and on every deposit and withdrawal request.
- Each validator node calculates the hash of the checkpoint file and then sends this through consensus to ensure all the nodes in the network agree on the state.
- If/when a network is taken down, the checkpoint file's hash is added to the genesis block.
- At network start-up, a validator submits a restore transaction with the checkpoint file.
- All other validators verify the checkpoint against their own, restore the state and then allow other transactions on the network.